Until recently I thought Julia and I were digging a bit into savings to donate more. With the tighter funding climate for effective altruism we thought it was worth spending down a bit, especially considering that our expenses should decrease significantly in 1.5y when our youngest starts kindergarten.
I was surprised, then, when I ran the numbers and realized that despite donating 50% of a reduced income, we were $9k (0.5%) [1] richer than when I left Google two years earlier.
This is a good problem to have! After thinking it over for the last month, however, I've decided to start earning less: I've asked for a voluntary salary reduction of $15k/y (10%). [2] This is something I've been thinking about off and on since I started working at a non-profit: it's much more efficient to reduce your salary than it is to make a donation. Additionally, since I'm asking others to fund our work I like the idea of putting my money (or what would be my money if I weren't passing it up) where my mouth is.
Despite doing this myself, voluntary salary reduction isn't something that I'd like to see become a norm:
I think it's really valuable for people to have a choice about where to apply their money to making the world better.
The organization where you have a comparative advantage in applying your skills will often not be the one that can do the most with additional funds, even after considering the tax advantages.
I especially don't think this is a good fit for junior employees and people without a lot of savings, where I'm concerned social pressure to take a reduction could keep people from making prudent financial decisions.
Still, I think this is a good choice for me, and I feel good about efficiently putting my money towards a better world.
[1] In current dollars. If you don't adjust for inflation it's $132k
more, but that's not meaningful.
[2] I'm not counting this towards my 50% goal, just like I'm not counting the pay cut I took when I stopped earning to give.
Thanks for writing about this! I've thought about this as well, but there are a couple of reasons I haven't done this yet. Primarily, I've been thinking more lately about making sure my time is appropriately valued. I'm still fairly early-mid career, and as much as it shouldn't matter, taking a salary reduction now probably means reduced earnings potential in the future. This obviously matters less if you don't plan on working for a non-highly impactful non-profit in the near future or if you're later in your career, but I think this is worth thinking about even if you're financially secure.
I think the sort of people who frequent this forum tend to be a bit too keen to work for not much because they think the work is so important, kind of like an 'impact discount', and I think historically effective non-profits have been a bit too keen to offer impact discount salaries. This seems to be less of an issue in the last 3 years in my experience, maybe because EA-aligned orgs are getting better funded.
I think taking impact discounts probably harm our impact in the longer term. It's not just about the money per se, but about the perception of value. Unfortunately, people tend to see your hourly rate as a reflection of how much value you provide. Young people should probably care about this a bit more, but granted it's a tough job market and it's probably a much lower priority than just getting a job.
It also, of course, depends on whether you think your current employer is the most effective place to be sending your counterfactual dollars. It's plausible that one might work at a highly impactful non-profit, but they think that another non-profit they could donate to is twice as effective (or whatever the ratio is based on their marginal tax rate, but it's probably not more than double).